Yardi Outlook: great opportunities for new services.
Richard Gerritsen, Yardi’s Regional Director for Europe was interviewed by the Dutch media partner Vastgoedmarkt and commented on technical innovations that have become unstoppable and developments that will be playing a crucial role for the actual user, with great opportunities for new services.
How will the technical revolution impact real estate?
“We’re expecting to see a large number of changes over the next few decades. Even after the COVID-19 outbreak, we won’t be moving from one static situation to another. Not at all. The current transformation has been happening for quite a while now, and we can expect to see further transformations over the next few years. It’ll be a rather bumpy ride at times. We’re currently going through some major changes, but this transformation is set to continue at the same rate”
Richard Gerritsen, Regional Director Europe for Yardi
So what should we expect?
The word consumption will acquire a different meaning. More than ever before, people will be seen as individual consumers, but they are not powerless victims. We are increasingly moving towards a situation where tenants in a block of flats, users of an office and shoppers in a shopping centre are all seen as consumers. And everything that is on offer is offered to me personally. This means that the individual can act directly, using their smartphone or its successor, whatever that may be.”.
What does this mean for real estate?
The user of an office can choose exactly what they need do during the day: for instance, book a work space for a few hours and a meeting room for later in the day. Both options can be booked very conveniently, without clicking 23 times. This is where the change in technology comes into play: it all needs to be straightforward, and in fact, it is straightforward. If, as a private individual, it’s easy for me to order a pizza, then it’s technically also possible for me to divide up my day. At the moment, the central element is still the premises, but technology needs to be far more user-focused – consumer-focused, in fact.”
Real estate companies cannot avoid this, says Gerritsen. “You can’t expect the user to adapt to the premises. Rather, the real estate company will have to adapt to the user. Again, this is a process. We don’t know the user’s needs yet, and employers don’t really know, either. And if even an employer has no idea, then it’s very difficult for a property owner to find out exactly what people want. This doesn’t mean that we now need to set up complicated research projects. Instead, we can use some very affordable technology that is already available. Think, for instance, of sensors in smart buildings or the Internet of Things, which can teach us about the use of premises. In fact, this should go even further, as the resulting data can then be analysed to find out which (new) services should be offered.” He sees this transformation as the logical consequence of today’s use of a property. “We are no longer looking for a few square metres of space, but we want to have an attractive location for both employees and customers. It’s a matter of finding a place where people feel good and are therefore productive.”.
So do property owners need to be more flexible in the way they respond to demand?
“Yes. Anyone who provides a building needs to focus on the user, not on the tenant. This means a lot of work and requires some rethinking, but this transformation also provides an opportunity to offer various other services. This is nothing new, and retail has a long history of carefully composing the right mix of shops, of planning locations, and of thinking about target groups and how to motivate customers to stay longer.”.
He believes that a personal approach will become more and more crucial, not just for office buildings, but also in the public area. This transformation will also impact people’s homes. “The home will be the place of everyday life, work and leisure. For people with an urban lifestyle the focus will be on building community, and we can already see this happening in American cities. Like-minded people come together, all living in the place and neighbourhood of their choice. This subsequently creates a need for co-working space.”
He adds, “All correspondence, including the emails and invoices, is automatically saved to the lease, which saves us time, labour and storage space and has ultimately assisted us in achieving a 99% rent collection rate.”
Is this transformation understood sufficiently well?
Ultimately, tenants don’t want to commit themselves to a certain number of square metres for many years to come; rather, they need a flexible working environment. This may make it difficult to value a given property, but we do need to find a good compromise between fixed and flexible use.”